Notes to Accounts of Harsha Engineers International Ltd.

Mar 31, 2025

C.17. Provisions, Contingent Liabilities and
Contingent Assets

Provisions are recognized at present value
when the Company has a present obligation
(legal or constructive) as a result of a past
event, it is probable that an outflow of
resources embodying economic benefits
will be required to settle the obligation and a
reliable estimate can be made of the amount
of the obligation. The expense relating to a
provision is presented in the statement of
profit and loss net of any reimbursement.

Provision for decommissioning costs are
provided at the present value of expected
costs to settle the obligation using estimated
cash flows and are recognized as part of the
cost of PPE. The cash flows are discounted
at a current pre-tax rate that reflects the risk
specific to the decommissioning liability.
The unwinding of discount is expensed as
incurred and recognized in the statement
of profit and loss as a finance cost. The
estimated future costs of decommissioning
are reviewed annually and adjusted as
appropriate. Changes in the estimated
future costs or in the discount rate applied
are added to or deducted from the cost of
the asset.

Contingent liabilities are not provided
for, if material, are disclosed by way of
notes to accounts, until such time that the
liabilities arising out of these outstanding
litigations have been crystallized by virtue
of a final order being passed by the relevant
regulatory authority or court or forum.
Contingent assets are not recognized in
financial statements. However, the same
is disclosed, where an inflow of economic
benefit is probable.

C.18. Business Combinations

Business Combinations (other than
common control business combinations)

In accordance with Ind AS 103, the Group
accounts for these business combinations
using the acquisition method when
control is transferred to the Group. The
consideration transferred for the business
combination is generally measured at fair
value as at the date the control is acquired
(acquisition date), as are the net identifiable
assets acquired. Any goodwill that arises
is tested annually for impairment. Any gain
on a bargain purchase is recognized in
OCI and accumulated in equity as capital
reserve if there exists clear evidence of
the underlying reasons for classifying the
business combination as resulting in a
bargain purchase; otherwise the gain is
recognized directly in equity as capital
reserve. Transaction costs are expensed as
incurred, except to the extent related to the
issue of debt or equity securities.

The consideration transferred does not
include amounts related to the settlement of
pre-existing relationships with the acquiree.
Such amounts are generally recognized in
profit or loss.

Any contingent consideration is measured
at fair value at the date of acquisition. If an
obligation to pay contingent consideration
that meets the definition of a financial
instrument is classified as equity, then
it is not re-measured subsequently
and settlement is accounted for within
equity. Other contingent consideration is
remeasured at fair value at each reporting
date and changes in the fair value of the
contingent consideration are recognized

in the consolidated statement of profit and
loss.

If a business combination is achieved in
stages, any previously held equity interest in
the acquiree is re-measured at its acquisition
date fair value and any resulting gain or loss
is recognized in the consolidated statement
of profit and loss or OCI, as appropriate.

Common Control Transactions

Business combinations involving entities
that are controlled by the Group in which
all the combining entities or businesses are
ultimately controlled by the same party or
parties are accounted for using the pooling
of interests method as follows :

1. The assets and liabilities of the

combining entities are reflected at their
carrying amounts.

2. No adjustments are made to reflect
fair values, or recognize any new
assets and liabilities. Adjustments are
only made to harmonies accounting
policies.

3. The financial information in the

financial statements in respect of prior
periods is restated as if the business
combination had occurred from the

beginning of the preceding period in

the financial statements, irrespective
of the actual date of the combination.
However, where the business
combination had occurred after that
date, the prior period information is
restated only from that date.

4. The balance of the retained earnings
appearing in the financial statements
of the transferor is aggregated with
the corresponding balance appearing
in the financial statements of the
transferee or is adjusted against
general reserve.

5. The identity of the reserves are
preserved and the reserves of the
transferor become reserves of the
transferee.

6. The difference, if any, between
the amounts recorded as share
capital issued plus any additional

consideration in the form of cash or
other assets and the amount of share
capital of the transferor is transferred
to capital reserve and is presented
separately from other capital reserves.

Wherever any business combination is
governed by the Scheme approved by the
Hon’ble High Court/ National Company Law
Tribunal [NCLT], the business combination
is accounted for as per the accounting
treatment sanctioned in the Scheme.

C.19. Events after reporting date

Where events occurring after the Balance
Sheet date provide evidence of conditions
that existed at the end of the reporting period,
the impact of such events is adjusted within
the financial statements. Otherwise, events
after the Balance Sheet date of material size
or nature are only disclosed.

C.20. Recent Accounting Pronouncements

The Ministry of Corporate Affairs [MCA]
notifies new standards or amendments to

the existing standards under Companies
[Indian Accounting Standards] Rules as
issued from time to time. During the year
ended March 31, 2025, MCA has notified
amendments to Ind AS 116 - Leases
relating to sale and lease back transactions,
applicable from April 01,2024. The Company
has reviewed the new amendments and
based on evaluation there is no significant
impact on its financial statements.

On May 09, 2025, MCA notifies the
amendments to Ind AS 21 - Effects of
Changes in Foreign Exchange Rates.
These amendments aim to provide
clearer guidance on assessing currency
exchange ability and estimating exchange
rates when currencies are not readily
exchangeable.

The amendments are effective for the year
beginning from April 01,2025. The Company
has reviewed the new amendments and
based on evaluation there is no significant
impact on its financial statements.

Nature and purpose of reserves:

A Capital Reserves/Merger Reserve: The Company has recognized Capital Reserves/Merger Reserve for difference between
consideration paid and net assets acquired under common control business combination transaction (Arising pursuant to
the Scheme of Amalgamation). This can be utilized in accordance with the provisions of the Companies Act, 2013.

B Security Premium: The amount received in excess of face value of the equity shares is recognized in Securities premium. It
is utilized in accordance with the provisions of the Companies Act, 2013.

C General Reserve: The General Reserve is used from time to time to transfer profits from retained earnings for appropriation
purposes. General Reserve is created by the transfer from one component of equity to another and is not an item of other
comprehensive income. This can be utilized in accordance with the provisions of the Companies Act, 2013.

D Retained Earnings: Retained earnings represents accumulated profit of the Company as on reporting date. The reserve can
be utilized in accordance with the provision of the Companies Act, 2013.

E Other Comprehensive Income -Cashflow Hedge Reserve: This represents the cumulative effective portion of gains or
losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges.
The cumulative gain or loss arising on changes in fair value of the designated portion of the hedging instruments that are
recognized and accumulated under the heading of effective portion of cash flow hedges will be reclassified to statement of
profit and loss only when the hedged items affect the profit and loss or upon discontinuation of hedge relationship.

Security for Current Borrowings

(1) State Bank of India :

Engineering Segment -HEIL - Secured by hypothecation of entire current assets of the Engineering Division on first
ranking pari passu basis with Citibank N.A., Yes Bank Ltd., RBL Bank Ltd., HSBC Ltd and HDFC Bank Ltd.

(2) Citi Bank :

Engineering Segment -HEIL 1) Working capital Secured by hypothecation of entire current assets of the Engineering
Division on first ranking pari passu basis with State Bank of India, Yes Bank Limited, RBL Bank Limited , HSBC Ltd and
HDFC Bank Limited, and secured by demand promissory note and letter of continuity for the facility amount 2) SBLC
extended to Citibank, China secured by demand promissory note and letter of continuity for the facility amount 3) SBLC
extended to Citibank, Romania secured by first charge on inventory and receivables of Harsha Engineers Europe SRL,
Romania in favor of Citibank, Romania and first charge on plant and machinery Harsha Engineers Europe SRL, Romania
in favor of Citibank, Romania and secured by demand promissory note and letter of continuity for the facility amount.

(3) YES Bank Ltd :

Engineering Segment -HEIL - Secured by hypothecation of entire current assets of the Engineering Division first ranking
pari passu with State Bank of India, Citibank NA., RBL Bank Limited , HSBC Ltd and HDFC Bank Limited and

Solar Segment Demand loans from banks are secured by first pari passu charge with RBL Bank Ltd. by hypothecation
of the Solar Division''s assets including stock of Raw Materials, Semi-Finished, Finished Goods, Consumable Stores and
spares and other such movables, book debts, bill whether documentary or clean, outstanding monies, receivables, plant
and machineries and all other current assets both present and future excluding project specific charge.

(4) RBL Bank Ltd :

Engineering Segment -HEIL - Secured by hypothecation of entire current assets of the Engineering Division first ranking
pari passu with State Bank of India, Citibank NA., Yes Bank Limited, HSBC Ltd and HDFC Bank Limited and

Solar Segment Demand loans from banks are secured by first pari passu charge with YES Bank Ltd by hypothecation
of the Solar Division''s assets including stock of Raw Materials, Semi-Finished, Finished Goods, Consumable Stores and
spares and other such movables, book debts, bill whether documentary or clean, outstanding monies, receivables, plant
and machineries and all other current assets both present and future.

(5) HDFC Bank Ltd :

Engineering Segment -HEIL - Secured by hypothecation of entire current assets of the Engineering Division first ranking
pari passu with State Bank of India, Citibank NA., Yes Bank Limited, HSBC Ltd and RBL Bank Limited.

The Company has obtained various borrowings from banks on the basis of security of current assets wherein the quarterly
returns/ statements of current assets as filed with banks are in agreement with the books of accounts.

Note : 2. Some of the current Income tax litigation pertaining to merger entities tax credit linkage system not available with the
department & Some are based on interpretation of the income tax law & rules. Management has been opined by its counsel
that many of the issues raised by revenues will not be sustainable in law as they are covered by judgments of respective judicial
authorities which supports its contention. As such no material impact on the financial of the Company is envisaged.

34.2. Corporate Social Responsibility (CSR) Expenses

Based on the guidance note on Accounting for Expenditure on Corporate Social Responsibility Activities (CSR) issued by the
Institute of Chartered Accountants of India and Section 135 of the Companies Act, 2013, read with rules made thereunder, the
Company has incurred the following expenditure on CSR activities for the financial year 2024-25.

# It includes '' 1500 lakhs of the City Civil Court, Bengaluru case filed by Orchestrate Systems Pvt Ltd. (OSPL) against the
Company. This matter was filed by OSPL after the winding up petition was filed by the Company against OSPL at Karnataka
High Court. later the Company had withdrawn the winding up petition at Karnataka High court against OSPL, with permission
of court to pursue the matter under MSMED Act. Thereafter, the Company had filed MSME case against OSPL for recovery of
'' 686 lakhs and on conciliation fail at MSMEFC the matter was refer to Arbitration. After completion of arbitration, arbitrator
has passed necessary order in favor of the Company for recovery of '' 686 lakhs plus interest as per the said order dated May
04, 2019. The Company has filed execution petition at commercial court Raipur for above arbitration order as assets of OSPL
are located in Chhattisgarh. The same matter is pending with commercial court, Raipur. OSPL has challenged this arbitration
at Gujarat High court and the same matter is also pendingm with Gujarat High court. Against, civil court case at Bengaluru by
OSPL, Counter Claim Revival Application has been submitted by the Company, Hearing on revival application is pending.

Note : 1. All of the issue of litigation pertaining to Income tax are based on interpretation of the income tax law & rules,
Management has been opined by its counsel that many of the issues raised by revenues will not be sustainable in law as they
are covered by judgments of respective judicial authorities which supports its contention. As such no material impact on the
financial of the Company is envisaged.

34.3. Segment Reporting:

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision
Maker [CODM] of the Company.

Ind AS 108 "Operating Segment" establishes standards for the way that public business enterprises report information about
operating segments and related disclosures about products and services, geographic areas. Accordingly, information has been
presented both along business segments and geographic segments.

A : BUSINESS SEGMENTS INFORMATION

The Chief Operating Decision Maker [CODM] reviews the Company as (i) "Engineering & Others" and (ii) "Solar-EPC and O&M"
segment .

The CODM reviews revenue, results, total assets and total liabilities as the performance indicator of an operating segment.

34.5. Termination of the HASPL Americas Corporation:

In the previous year, M/s HASPL Americas Corporation, Wholly Owned Subsidiary of the Company had been terminated in
accordance with applicable laws, as per certificate issued by State Corporation Commission, Virginia on February 29, 2024. The
necessary accounting treatment had been given accordingly in in the previous financials.

34.6. Sale of Investment of the Sunstream Green Energy One Pvt. Ltd.:

In the previous year, the Company had transferred equity investment of 32,97,050 shares representing 25.9999% of Sunstream
Green Energy One Private Limited ("SGEOPL"), Associates of the Company to the Sunstream Green Energy Pvt Ltd at '' 10/- per
share in accordance with Agreement for Sale of Shares dated January 25, 2024 (Share Purchase Agreement) . On account of
this transfer the Company’s stake had been reduced to 10 equity shares in SGEOPL. Further the Company has also transferred
remaining 10 equity shares during current financial year. The necessary accounting treatment had been given accordingly in
the financials.

34.7. Additional Regulatory Information :

1) The Company does not have any investment property. Hence, comment related to revaluation is not made.

2) The Company has not granted any Loans or Advances in the nature of loans to promoters, directors, KMPs and the related
parties (as defined under the Companies Act, 2013), either severally or jointly with any other person, that are: (a) repayable
on demand; or (b)without specifying any terms or period of repayment.

3) No proceedings have been initiated during the year or are pending against the Company as at reporting date for holding any
benami property under the Benami Transactions (Prohibition) Act, 1988 (as amended in 2016) and rules made thereunder.

4) The Company has not been declared as wilful defaulter (by virtue of Section 477 & 488 of the Companies Act, 2013) by any
bank or financial institution or government or any government authority.

5) The Company had transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560
of the Companies Act, 1956. and having outstanding balance at the year end as per below details.

9) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

10) The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered
or disclosed as income during the year in the tax assessments under the Income Act, 1961 (such as, search or survey or
any other relevant provisions of the Income Tax Act, 1961).

34.8. Dividends Proposed to be Distributed

The Board of Directors, at its meeting held on May 08, 2025, recommended the final dividend of Re. 1.00 per equity share
of '' 10/- each for the year 2024-25, which will result in a total outflow of '' 910.44 lakhs. The recommended dividend is
subject to the approval of the shareholders at the Annual General Meeting and hence not recognized as a liability as at
March 31,2025.

34.9. Maintenance of Books of Accounts with Audit Trail

The Ministry of Corporate Affairs (MCA) has prescribed a requirement for companies under the proviso to Rule 3(1) of the
Companies (Accounts) Rules, 2014 inserted by the Companies (Accounts) Amendment Rules 2021 requiring companies,
which use accounting software for maintaining its books of account, to use only such accounting software which has a
feature of recording audit trail of each and every transaction, creating an edit log of each change made in the books of
account along with the date when such changes were made and ensuring that the audit trail cannot be disabled.

The Company have used multiple accounting software for maintaining books of account which have a feature of recording
audit trail (edit log) facility and the same has been operated throughout the year for all relevant transactions recorded in
the software, except for instances mentioned below -

a) The Company has used accounting software for maintaining its books of accounts which has a feature of recording
audit trail [edit log] facility and the same has been operational throughout the year for all relevant transactions
recorded in the software except that no audit trail has been enabled at the database level for accounting software to
log any direct data changes.

Further, no instance of audit trail feature being tampered with was noted in respect of the accounting software.
Presently, the log has been activated at the application and the privileged access to HANA database continues to
be restricted to limited set of users who necessarily require this access for maintenance and administration of the
database.

b) One segment of the Company has used an accounting software Tally for maintaining its books of account which has
a feature of recording audit trail (edit log) facility.

6) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory
period.

7) The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with the
Companies (Restriction on number of Layers) Rules, 2017

8) (A) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign

entities (Intermediaries) with the understanding that the Intermediary shall:

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on
behalf of the Company (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

(B) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party)
with the understanding (whether recorded in writing or otherwise) that the Company shall :

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on
behalf of the Funding Party (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

Reason for change more than 25% :

* Current Ratio (Times) : Improve due to decrease in Current Borrowings

** Debt-Equity Ratio (Times) : Improve due to decrease in Current Borrowings

*** Debt Service Coverage Ratio (Times) : Decline due to decrease in PAT (with reference to '' 9,501 lakhs Impairment in
carrying value of Investment of wholly owned subsidiary, Harsha Engineers Europe SRL-Romania & '' 2,060 lakhs Bad Debts
Write Off / Net Sundry Balances write off pertains to Solar-EPC and O&M Segment.)

# Return on Equity Ratio (%) : Decline due to decrease in PAT (with reference to '' 9,501 lakhs Impairment in carrying value
of Investment of wholly owned subsidiary, Harsha Engineers Europe SRL-Romania & '' 2,060 lakhs Bad Debts Write Off / Net
Sundry Balances write off pertains to Solar-EPC and O&M Segment.)

## Net profit ratio (%) : Decline due to decrease in PAT (with reference to '' 9,501 lakhs Impairment in carrying value of
Investment of wholly owned subsidiary, Harsha Engineers Europe SRL-Romania & '' 2,060 lakhs Bad Debts Write Off / Net
Sundry Balances write off pertains to Solar-EPC and O&M Segment.)

### Return on Capital Employed (%) : Decline due to decrease in PBIT (with reference to '' 9,501 lakhs Impairment in carrying
value of Investment of wholly owned subsidiary, Harsha Engineers Europe SRL-Romania & '' 2,060 lakhs Bad Debts Write Off /
Net Sundry Balances write off pertains to Solar-EPC and O&M Segment.)

# Investments in Subsidiaries, Joint venture & Associates have been accounted at historical cost (Net of Impairment). Since
these are out of scope of Ind AS 109 for the purposes of measurement, the same have not been disclosed in the above table.

Fair value of financial assets and liabilities measured at amortized cost is not materially different from the amortized cost.
Further, impact of time value of money is not significant for the financial instruments classified as current. Accordingly, the fair
value has not been disclosed separately.

Types of inputs are as under:

Input Level 1 (Directly Observable) which includes quoted prices in active markets for identical assets such as quoted price for
an equity security on Security Exchanges.

Input Level 2 (Indirectly Observable) which includes prices in active markets for similar assets such as quoted price for similar
assets in active markets, valuation multiple derived from prices in observed transactions involving similar businesses etc.

Input Level 3 (Unobservable) which includes management''s own assumptions for arriving at a fair value such as projected
cash flows used to value a business etc.

The Company''s principal financial liabilities comprises of loans & borrowings and trade & other payables. The main purpose
of these financial liabilities is to finance the Company operations and to provide guarantees to support its operations. The
Company''s principal financial assets include trade & other receivables, cash & cash equivalents and investments that are
derived directly from its operations. The Company has exposure to the following risks arising from financial instruments:

i. Credit risk

ii. Liquidity risk

iii. Market risk

(i) Credit risk

Credit risk is the risk that a customer or counterparty to a financial instrument will fail to perform or fail to pay amounts
due causing financial loss to the Company. The potential activities where credit risks may arise include from cash and cash
equivalents, derivative financial instruments and security deposits or other deposits and principally from credit exposures to
customers relating to outstanding receivables. The maximum credit exposure associated with financial assets is equal to the
carrying amount. Details of the credit risk specific to the Company along with relevant mitigation procedures adopted have
been enumerated below:

Trade receivables

The Company''s exposure to credit risk is the exposure that Company has on account of goods & services rendered to a
contractual counterparty or counterparties, whether with collateral or otherwise for which the contracted consideration is yet
to be received. The Company''s customer base are Industrial and Commercial.

The Company provides for allowance for impairment that represents its estimate of expected losses in respect of trade and
other receivables.

The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on
a provision matrix, Consequently, the Company has taken Life time expected credit losses approach (simplified approach) and
loss allowance was determined based on loss rate at 0 % for note due & ageing less than 6 months, 2.5 % for ageing between 6
to 12 months, 5 % for ageing between 1-2 years, 10 % for ageing between 2-3 years, 25 % for ageing more than 3 years.

Other financial assets comprise of cash and cash equivalents, Bank fixed deposits, loans provided to employees and investments
in equity shares of companies other than subsidiaries, associates and joint ventures as well as derivative instruments.

- Cash and cash equivalents and Bank deposits are placed with banks having good reputation and past track record with
adequate credit rating. The Company reviews their credit-worthiness at regular intervals.

- Investments are made in credit worthy Asset Management Companies or Instruments.

- Derivative instrument comprises cross currency interest rate swaps, forward contracts, options etc. where the counter
parties are banks with good reputation, and past track record with adequate credit rating. Accordingly no default risk is
perceived.

(ii) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial
liabilities that are proposed to be settled by delivering cash or other financial asset. The Company’s financial planning has
ensured, as far as possible, that there is sufficient liquidity to meet the liabilities whenever due, under both normal and stressed
conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

Exposure to liquidity risk

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross /
undiscounted values and include estimated interest payments and exclude the impact of netting agreements.

(iii) Market risk

Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will
affect the Company’s income or the value of its holdings of financial instruments.

Interest rate risk :

Interest rate risk is the risk that the fair value of future cashflows of the financial instruments will fluctuate because of changes
in market interest rates. In order to maximize the Company’s position with regards to interest expenses and to manage the
interest rate risk, treasury performs a comprehensive corporate interest rate risk management by time to time evaluating and
utilizing the favorable financial instrument. There are certain fixed interest rate barring investment instruments, which are
excluded to derive interest rate risk. As at the year end, the Company is exposed to changes in market interest rates through
investment and bank borrowings at variable interest rates, to derive sensitivity it has been net out.

Sensitivity

A change of 50 bps in interest rates would have following impact on profit before tax.

C. Capital Management

The Company’s objectives when managing capital are to:

- safeguard their ability to continue as a going concern so that they can continue to provide return for shareholders and
benefits for other stakeholders.

- maintain an optimal capital structure to reduce the cost of capital.

The Company monitors capital on the basis of the following debt equity ratio:
*Debt includes Current and Non-current Borrowings & Lease liabilities.(including current maturities of long term debt)

Company believes in conservative leverage policy. Company’s capital expenditure plan over the medium term shall be largely
funded through internal accruals.

Notes to Financial Statements 1 to 36

As per our report of even date attached

For Pankaj R. Shah & Associates For and on behalf of the Board of Directors

Chartered Accountants Harsha Engineers International Limited

FRN No.: 107361W (CIN: L29307GJ2010PLC063233)

Chintan Shah Rajendra Shah Harish Rangwala

Managing Partner Chairman & Whole-time Director Managing Director

M. No.: 110142 DIN: 00061922 DIN: 00278062

Maulik Jasani Kiran Mohanty

VP Finance & Group CFO Company Secretary & Chief Compliance Officer

M. No.: F9907

Date: May 08, 2025 Date: May 08, 2025

Place: Ahmedabad Place: Ahmedabad

---

Mar 31, 2024

C.17. Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognised at present value when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits

will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.

Provision for decommissioning costs are provided at the present value of expected costs to settle the obligation using estimated cash flows and are recognised as part of the cost of PPE. The cash flows are discounted at a current pre-tax rate that reflects the risk specific to the decommissioning liability. The unwinding of discount is expensed as incurred and recognised in the statement of profit and loss as a finance cost. The estimated future costs of decommissioning are reviewed annually and adjusted as appropriate. Changes in the estimated future costs or in the discount rate applied are added to or deducted from the cost of the asset.

Contingent liabilities are not provided for, if material, are disclosed by way of notes to accounts, until such time that the liabilities arising out of these outstanding litigations have been crystallised by virtue of a final order being passed by the relevant regulatory authority or court or forum. Contingent assets are not recognised in financial statements. However, the same is disclosed, where an inflow of economic benefit is probable.

C.18. Business Combinations

Business Combinations (other than common control business combinations)

In accordance with Ind AS 103, the Group accounts for these business combinations using the acquisition method when control is transferred to the Group. The consideration transferred for the business combination is generally measured at fair value as at the date the control is acquired (acquisition date), as are the net identifiable assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in OCI and accumulated in equity as capital reserve if there exists clear evidence of the underlying reasons for classifying the business combination as resulting in a bargain purchase; otherwise the gain is recognised directly in equity as capital

reserve. Transaction costs are expensed as incurred, except to the extent related to the issue of debt or equity securities.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships with the acquiree. Such amounts are generally recognised in profit or loss.

Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent consideration that meets the definition of a financial instrument is classified as equity, then it is not re-measured subsequently and settlement is accounted for within equity. Other contingent consideration is remeasured at fair value at each reporting date and changes in the fair value of the contingent consideration are recognised in the consolidated statement of profit and loss.

If a business combination is achieved in stages, any previously held equity interest in the acquiree is re-measured at its acquisition date fair value and any resulting gain or loss is recognised in the consolidated statement of profit and loss or OCI, as appropriate.

Common Control Transactions

Business combinations involving entities that are controlled by the Group in which all the combining entities or businesses are ultimately controlled by the same party or parties are accounted for using the pooling of interests method as follows :

1. The assets and liabilities of the combining entities are reflected at their carrying amounts.

2. No adjustments are made to reflect fair values, or recognise any new assets and liabilities. Adjustments are only made to harmonies accounting policies.

3. The financial information in the financial statements in respect of prior periods is restated as if the business combination had occurred from the beginning of the preceding period in the financial statements, irrespective of the actual date of the combination. However, where the business combination had

occurred after that date, the prior period information is restated only from that date.

4. The balance of the retained earnings appearing in the financial statements of the transferor is aggregated with the corresponding balance appearing in the financial statements of the transferee or is adjusted against general reserve.

5. The identity of the reserves are preserved and the reserves of the transferor become reserves of the transferee.

6. The difference, if any, between the amounts recorded as share capital issued plus any additional consideration in the form of cash or other assets and the amount of share capital of the transferor is transferred to capital reserve and is presented separately from other capital reserves.

Wherever any business combination is governed by the Scheme approved by the Hon’ble High Court/ National Company Law Tribunal [NCLT], the business combination is accounted for as per the accounting treatment sanctioned in the Scheme.

C.19. Events after reporting date

Where events occurring after the Balance Sheet date provide evidence of conditions that existed at the end of the reporting period, the impact of such events is adjusted within the financial statements. Otherwise, events after the Balance Sheet date of material size or nature are only disclosed.

C.20. Recent Accounting Pronouncements

The Ministry of Corporate Affairs [MCA] notifies new standard or amendments to the existing standards. For the year ended March 31, 2024, there are no new standards or amendments to the existing standards which are notified but not yet effective.

Security for Current Borrowings

(1) State Bank of India :

Engineering Segment for Harsha India- Secured by hypothecation of entire current assets of the Engineering Division on first ranking pari passu basis with Citibank N.A., Yes Bank Ltd., RBL Bank Ltd. and HDFC Bank Ltd.

(2) Citi Bank :

Engineering Segment for Harsha India - 1) Working capital Secured by hypothecation of entire current assets of the Engineering Division on first ranking pari passu basis with State Bank of India, Yes Bank Limited, RBL Bank Limited and HDFC Bank Limited, and secured by demand promissory note and letter of continuity for the facility amount 2) SBLC extended to Citibank, China secured by demand promissory note and letter of continuity for the facility amount 3) SBLC extended to Citibank, Romania secured by first charge on inventory and receivables of Harsha Engineers Europe SRL, Romania in favour of Citibank, Romania and first charge on plant and machinery Harsha Engineers Europe SRL, Romania in favour of Citibank, Romania and secured by demand promissory note and letter of continuity for the facility amount.

(3) YES Bank Ltd :

Engineering Segment for Harsha India- Secured by hypothecation of entire current assets of the Engineering Division first ranking pari passu with State Bank of India, Citibank NA., RBL Bank Limited and HDFC Bank Limited and for Solar Segment Demand loans from banks are secured by first pari passu charge with RBL Bank Ltd. by hypothecation of the Solar Division''s assets including stock of Raw Materials, Semi-Finished, Finished Goods, Consumable Stores and spares and other such movables, book debts, bill whether documentary or clean, outstanding monies, receivables, plant and machineries and all other current assets both present and future excluding project specific charge.

(4) RBL Bank Ltd :

Engineering Segment for Harsha India- Secured by hypothecation of entire current assets of the Engineering Division first ranking pari passu with State Bank of India, Citibank NA., Yes Bank Limited and HDFC Bank Limited and for Solar Segment Demand loans from banks are secured by first pari passu charge with YES Bank Ltd by hypothecation of the Solar Division''s assets including stock of Raw Materials, Semi-Finished, Finished Goods, Consumable Stores and spares and other such movables, book debts, bill whether documentary or clean, outstanding monies, receivables, plant and machineries and all other current assets both present and future.

The Company has obtained various borrowings from banks on the basis of security of current assets wherein the quarterly returns/ statements of current assets as filed with banks are in agreement with the books of accounts.

A. Actuarial Risk: Risk in cost more than expected due to adverse salary growth experience, variability morality rates, and variability in withdrawal rate.

B. Investment Risk: For funded plans that rely on insures for managing the assets, the value of the assets certified by the insurer may not be the fair value of instruments backing the liability. In such cases the present value of the assets is independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.

C. Liquidity Risk: Employees with high salaries and long duration or those higher in hierarchy, accumulate significant level of benefits. If some of such employees resign/retire from the company, there can be strain of the cashflows.

D. Market Risk: Market risk is collective term for risk that are related to changes and fluctuations of the financial markets. One actuarial assumption that has a market effect in the discount rate. The discount rate reflects the time value of money. An increase in discount rate leads to a decrease in Defined Benefit Obligation of the plan benefits & vice versa. This assumption depends on the yields on the corporate/government bonds and hence the valuation of liability is exposed to fluctuations in the yields as at the valuation date.

E. Legislative Risk: Legislative risk is the risk of increase in plan liabilities or reduction in the plan assets due to change in the legislative/regulation.

32.3. Segment Reporting:

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker [CODM] of the Company.

Ind AS 108 "Operating Segment" establishes standards for the way that public business enterprises report information about operating segments and related disclosures about products and services, geographic areas. Accordingly, information has been presented both along business segments and geographic segments.

A : BUSINESS SEGMENTS INFORMATION

The Chief Operating Decision Maker [CODM] reviews the Company as (i) "Engineering & Others" and (ii) "Solar-EPC and O&M" segment .

The CODM reviews revenue, results, total assets and total liabilities as the performance indicator of an operating segment.

The "Engineering & Others" segment includes all activities related with Bearing Cages & Stamp components including but not limited to sales, services, design, tooling, development, procurement and manufacturing.

The "Solar-EPC and O&M" segment includes all activities related with Solar Power Projects including but not limited to engineering, design, development, procurement, construction, erection, installation, commissioning, operation & maintenance.

The above business segments have been identified considering, (1) the different risk and returns and (2) the Customers.

32.5. Merger:

Scheme of Amalgamation - 2

In the previous year, the Company had filed a Scheme of Amalgamation between Harsha Engineers B.V. and Harsha Engineers International Limited (formerly known as Harsha Engineers International Private Limited and Harsha Abakus Solar Private Limited, "HASPL", the Company) and their respective shareholders and creditors under section 234 read with sections 230 to 232 along with other applicable provisions of the Companies Act, 2013 other applicable rules and regulations made thereunder (including any statutory modification(s) or re-enactment(s) or amendment(s) thereof for the time being in force), subject to necessary statutory approvals ("the Scheme of Amalgamation - 2").

The Company had holding 100% of the equity shares of the Harsha Engineers BV. Accordingly, pursuant to amalgamation of Harsha Engineers B.V. with the Company on the Appointed Date, equity shares held by the Company in Harsha Engineers BV had been cancelled and extinguished and hence, no shares of the Company had been issued and allotted. On the Scheme of Amalgamation - 2 being effective, the assets and liabilities pertaining to the Harsha Engineers B.V. had been accounted for at their respective carrying values as appearing in their respective books as on the Appointed Date i.e. November 14, 2022.

Harsha Engineers B.V. -Netherland had merged with the Company effective from November 14, 2022 as per the Scheme of Amalgamation-2. The necessary accounting treatment had been given, as approved in NCLT order and provided in the Scheme of Amalgamation-2.

The surplus/deficit of the Net Equity of Harsha Engineers B.V. over the value of investments in the shares of this company appearing in the books of the Company and had cancelled pursuant to the Scheme had been adjusted in the "Capital Reserve Account" of the Company. Further, as a result of merger the net difference amounting to '' 488 lakhs had credited to the Capital Reserve.

32.6. Termination of the HASPL Americas Corporation:

M/s HASPL Americas Corporation, Wholly Owned Subsidiary of the Company has been terminated in accordance with applicable laws, as per certificate issued by State Corporation Commission, Virginia on February 29, 2024. The necessary accounting treatment has been given accordingly in these financials.

32.7. Sale of Investment of the Sunstream Green Energy One Pvt. Ltd.:

The Company has transferred equity investment of 32,97,050 shares representing 25.9999% of Sunstream Green Energy One Private Limited ("SGEOPL"), Associates of the Company to the Sunstream Green Energy Pvt Ltd at '' 10/- per share in accordance with Agreement for Sale of Shares dated January 25, 2024 (Share Purchase Agreement) . On account of this transfer the Company’s stake has been reduced to 10 equity shares in SGEOPL. Hence, the SGEOPL is no more Associate of the Company. The necessary accounting treatment has been given accordingly in these financials.

32.8. Additional Regulatory Information :

1) The Company does not have any investment property hence, comment related to revaluation is not made.

2) The Company has not granted any Loans or Advances in the nature of loans to promoters, directors, KMPs and the related parties (as defined under the Companies Act, 2013), either severally or jointly with any other person, that are: (a) repayable on demand; or (b)without specifying any terms or period of repayment.

3) No proceedings have been initiated during the year or are pending against the Company as at reporting date for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (as amended in 2016) and rules made thereunder.

4) The Company has not been declared as wilful defaulter (by virtue of Section 477 & 488 of the Companies Act, 2013) by any bank or financial institution or government or any government authority.

5) The Company had transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956. and having outstanding balance at the year end as per below details.

6) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

7) The company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017

8) (A) The company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including

foreign entities (Intermediaries) with the understanding that the Intermediary shall:

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

(B) The company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the company shall :

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

9) The company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

10) The company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

32.9. Dividends Proposed to be Distributed

The Board of Directors, at its meeting held on May 16, 2024, recommended the final dividend of Re. 1.00 per equity share of '' 10/- each for the year 2023-24, which will result in a total outflow of '' 910.44 lakhs. The recommended dividend is subject to the approval of the shareholders at the Annual General Meeting and hence not recognized as a liability as at March 31,2024.

32.10. Maintenance of Books of Accounts with Audit Trail

The Ministry of Corporate Affairs (MCA) has prescribed a new requirement for companies under the proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 inserted by the Companies (Accounts) Amendment Rules 2021 requiring companies, which use accounting software for maintaining its books of account, to use only such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in the books of account along with the date when such changes were made and ensuring that the audit trail cannot be disabled.

The Company have used multiple accounting software for maintaining books of account which have a feature of recording audit trail (edit log) facility and the same has been operated throughout the year for all relevant transactions recorded in the software, except for instances mentioned below -

a) The Company has used accounting software for maintaining its books of accounts which has a feature of recording audit trail [edit log] facility and the same has been operational throughout the year for all relevant transactions recorded in the software except that no audit trail has been enabled at the database level for accounting software to log any direct data changes.

Further, no instance of audit trail feature being tampered with was noted in respect of the accounting software. Presently, the log has been activated at the application and the privileged access to HANA database continues to be restricted to limited set of users who necessarily require this access for maintenance and administration of the database.

b) One segment of the Company has used an accounting software Tally for maintaining its books of account which has a feature of recording audit trail (edit log) facility. However, the audit trail feature was not enabled.

32.11. Previous year’s figures have been regrouped / reclassified to make them comparable with those of the current reporting year, wherever necessary.

B. Measurement of Fair Values

Valuation techniques and significant unobservable inputs

The following tables show the valuation techniques used in measuring Level 2 and Level 3 fair values, as well as the significant unobservable inputs used.

C. Financial Risk Management

The Company’s principal financial liabilities comprises of loans & borrowings and trade & other payables. The main purpose of these financial liabilities is to finance the Company operations and to provide guarantees to support its operations. The Company’s principal financial assets include trade & other receivables, cash & cash equivalents and investments that are derived directly from its operations. The Company has exposure to the following risks arising from financial instruments:

i. Credit risk

ii. Liquidity risk

iii. Market risk

(i) Credit risk

Credit risk is the risk that a customer or counterparty to a financial instrument will fail to perform or fail to pay amounts due causing financial loss to the Company. The potential activities where credit risks may arise include from cash and cash equivalents, derivative financial instruments and security deposits or other deposits and principally from credit exposures to customers relating to outstanding receivables. The maximum credit exposure associated with financial assets is equal to the carrying amount. Details of the credit risk specific to the Company along with relevant mitigation procedures adopted have been enumerated below:

Trade receivables

The Company’s exposure to credit risk is the exposure that Company has on account of goods & services rendered to a contractual counterparty or counterparties, whether with collateral or otherwise for which the contracted consideration is yet to be received. The Company’s customer base are Industrial and Commercial.

The Company provides for allowance for impairment that represents its estimate of expected losses in respect of trade and other receivables.

The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix.

Other financial assets

Other financial assets comprise of cash and cash equivalents, Bank fixed deposits, loans provided to employees and investments in equity shares of companies other than subsidiaries, associates and joint ventures as well as derivative instruments.

- Cash and cash equivalents and Bank deposits are placed with banks having good reputation and past track record with adequate credit rating. The Company reviews their credit-worthiness at regular intervals.

- Investments are made in credit worthy Asset Management Companies or Instruments.

- Derivative instrument comprises cross currency interest rate swaps, forward contracts, options etc. where the counter parties are banks with good reputation, and past track record with adequate credit rating. Accordingly no default risk is perceived.

(ii) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are proposed to be settled by delivering cash or other financial asset. The Company’s financial planning has ensured, as far as possible, that there is sufficient liquidity to meet the liabilities whenever due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

Exposure to liquidity risk

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross / undiscounted values and include estimated interest payments and exclude the impact of netting agreements.

(iii) Market risk

Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Company’s income or the value of its holdings of financial instruments.

Interest rate risk :

Interest rate risk is the risk that the fair value of future cashflows of the financial instruments will fluctuate because of changes in market interest rates. In order to optimise the Company’s position with regards to interest expenses and to manage the interest rate risk, treasury performs a comprehensive corporate interest rate risk management by time to time evaluating and utilising the favourable financial instrument. There are certain fixed interest rate barring investment instruments, which are excluded to derive interest rate risk. As at March 31,2024, the company is exposed to changes in market interest rates through investment and bank borrowings at variable interest rates.

Currency risk

The functional currency of the company is Indian Rupees and its revenue is generated from operations in India. It is exposedto foreigncurrencyriskarisingoutoftheEURO,USDollar, CNY,JPYetc.Accordingly,theforeigncurrencyexposure has been hedged time to time as per the company’s Risk management policy after evaluating the risk associated with. This aside, the Company does not have any derivative instruments used for trading or speculative purposes.

D. Capital Management

The Company’s objectives when managing capital are to:

- safeguard their ability to continue as a going concern so that they can continue to provide return for shareholders and benefits for other stakeholders.

- maintain an optimal capital structure to reduce the cost of capital.

The Company monitors capital on the basis of the following debt equity ratio: *Debt includes Current and Non-current Borrowings & Lease liabilities.(including current maturities of long term debt)

Company believes in conservative leverage policy. Company’s capital expenditure plan over the medium term shall be largely funded through internal accruals.

Notes to Financial Statements 1 to 34

As per our report of even date attached For and on behalf of the Board of Directors For Pankaj R. Shah & Associates Harsha Engineers International Limited

Chartered Accountants (CIN: L29307GJ2010PLC063233)

FRN: 107361W

Chintan Shah Rajendra Shah Harish Rangwala

Managing Partner Chairman & Whole-time Director Managing Director

M. No.: 110142 DIN: 00061922 DIN: 00278062

Maulik Jasani Kiran Mohanty

VP Finance & Group CFO Company Secretary & Chief Compliance Officer

M. No.: F9907

Date: May 16, 2024 Date: May 16, 2024

Place: Ahmedabad Place: Ahmedabad

---

Mar 31, 2023

Security for Current Borrowings

(1) State Bank of India :

Engineering Segment for Harsha India- Secured by hypothecation of entire current assets of the Engineering Division First ranking pari passu with Citibank N.A., Yes Bank Limited, RBL Bank Limited and HDFC Bank Limited Collaterally secured by way of hypothecation over the entire plant & machinery of the Engineering Division''s Changodar and Moraiya Plant (excluding Brass Division at Moraiya Plant hypothecated to Citibank NA. ; DGBB Division at Changodar Plant Exclusive Assets hypothecated to HDFC Bank Limited and RBL Bank Limited on pari passu basis)

(2) Citi Bank :

Engineering Segment for Harsha India - Engineering Segment for Harsha India 1) Working capital Secured by hypothecation of entire current assets of the Engineering Division first ranking pari passu with State Bank of India, Yes Bank Limited, RBL Bank Limited and HDFC Bank Limited 2) SBLC extended to Citibank, China secured by First pari passu charge by way of equitable mortgage on property at Moraiya in favour of Citibank, India, 3) SBLC extended to Citibank, Romania secured by First pari passu charge on Moraiya and Changodar property in favour of Citibank, India, First pari passu charge on Plant and Machinery at Moraiya Brass division in favour of Citibank, India, Second charge on inventory and receivables of Harsha Engineers Europe SRL, Romania in favour of Citibank, Romania and Second charge on plant and machinery Harsha Engineers Europe SRL, Romania in favour of Citibank, Romania.

(3) YES Bank Limited :

Engineering Segment for Harsha India- Secured by hypothecation of entire current assets of the Engineering Division first ranking pari passu with State Bank of India, Citibank NA., RBL Bank Limited and HDFC Bank Limited and for Solar Segment Demand loans from banks are secured by first pari passu charge with RBL Bank Limited by hypothecation of the Solar Division''s assets including stock of Raw Materials, Semi-Finished, Finished Goods, Consumable Stores and spares and other such movables, book debts, bill whether documentary or clean, outstanding monies, receivables, plant and machineries and all other current assets both present and future excluding project specific charge.

(4) RBL Bank Limited :

Engineering Segment for Harsha India- Secured by hypothecation of entire current assets of the Engineering Division first ranking pari passu with State Bank of India, Citibank NA., Yes Bank Limited and HDFC Bank Limited and for Solar Segment Demand loans from banks are secured by first pari passu charge with YES Bank Limited by hypothecation of the Solar Division''s assets including stock of Raw Materials, Semi-Finished, Finished Goods, Consumable Stores and spares and other such movables, book debts, bill whether documentary or clean, outstanding monies, receivables, plant and machineries and all other current assets both present and future.

(5) HDFC Bank Limited :

Engineering Segment for Harsha India- Secured by hypothecation of entire current assets of the Engineering Division first ranking pari passu with State Bank of India, Citibank NA., Yes Bank Limited and RBL Bank Limited.

(6) ICICI Bank Limited :

Engineering Segment for Harsha India- ICICI Bank has been as unsecured borrowing from March''23, relevant charge satisfaction has been completed in May''23, accordingly in March''22 it was considered secured and in March''23 it was considered unsecured and presented accordingly.

32.4. Contingent Liabilities, Contingent Assets and Capital Commitments

Contingent liabilities are not provided for, if material, are disclosed by way of notes to accounts (net of advance, if any). Contingent assets are not recognised in financial statements. However, the same is disclosed, where an inflow of economic benefit is probable.

('' In lakhs)
Particulars	As at
	March 31, 2023	March 31, 2022
(a) CONTINGENT LIABILITIES NOT PROVIDED FOR :
(i) Letter of Credit/Corporate Guarantee/Stand by Letter of Credit (SBLC) & Bank Guarantee (Outstanding)	12,059	12,245
(ii) Custom duty benefits towards duty free imports under EPCG license scheme in respect of which export obligation are yet to be discharged	13	143
(iii) Claims against the Company not acknowledged as debts:
- Income Tax Matters	3,293	2,379
- Excise, Service Tax and GST Matters	99	106
(iv) Other Matters including claims related to Customer, Vendor, ESIC, Electricity, Ex-Employee and others #	1,676	1,690
(b) CAPITAL COMMITMENTS :
Estimated amount of contracts remaining to be executed on capital account and not provided for (net of capital advances)	2,530	1,073

# It includes '' 1,500 lakhs of the City Civil Court, Bengaluru case filed by Orchestrate Systems Private Limited (OSPL) against the Company. This matter was filed by OSPL after the winding up petition was filed by the Company against OSPL at Karnataka High Court. later the Company had withdrawn the winding up petition at Karnataka High court against OSPL, with permission of court to pursue the matter under MSMED Act. Thereafter, the Company had filed MSME case against OSPL for recovery of '' 686 lakhs and on conciliation fail at MSMEFC the matter was refer to Arbitration. After completion of arbitration, arbitrator has passed necessary order in favour of the Company for recovery of '' 686 lakhs plus interest as per the said order dated May 04, 2019. The Company has filed execution petition at commercial court Raipur for above arbitration order as assets of OSPL are located in Chhattisgarh. The same matter is pending with commercial court, Raipur. OSPL has challenged this arbitration at Gujarat High court and the same matter is also pending with Gujarat High court. Against, Civil Court case at Bengaluru by OSPL, Counter Claim Revival Application has been submitted by the Company, Hearing on revival application is pending.

Note : 1. All of the issue of litigation pertaining to Income tax are based on interpretation of the Income Tax Law & rules, Management has been opined by its counsel that many of the issues raised by revenues will not be sustainable in law as they are covered by judgements of respective judicial authorities which supports its contention. As such no material impact on the financial of the Company is envisaged.

Note : 2. Most of the issue of litigation pertaining to Central Excise/ Service tax are based on interpretation of the tax law & rules, Management has been opined by its counsel that many of the issues raised by revenues will not be sustainable in law as they are covered by judgements of respective judicial authorities which supports its contention. As such no material impact on the financial of the Company is envisaged.

32.5. Corporate Social Responsibility (CSR) Expenses

Based on the guidance note on Accounting for Expenditure on Corporate Social Responsibility Activities (CSR) issued by the Institute of Chartered Accountants of India and Section 135 of the Companies Act, 2013, read with rules made thereunder, on account of available of excess set-off, the Company was not required to spend on CSR Activties under the Companies Act 2013 for the financial year 2022-23 in accordance with provisions of section 135(5) of Companies Act 2013. Refer below notes.

32.6. Merger

Pursuant to the Composite Scheme of Amalgamation and Arrangement between Aastha Tools Private Limited (ATPL), Harsha Engineers (India) Private Limited (HEIPL), Harsha Engineers Limited (HEL), Helianthus Solar Power Private Limited (HSPPL) and Harsha Abakus Solar Private Limited (the Company) and their respective shareolders and creditors under section 230 to 232 read with section 61 and 66 alongwith other applicable provisions of the Companies Act, 2013 ("the Scheme" or "Business Reorganisation Scheme"), ATPL and HEIPL were merged into HEL with effect from the appointed date, April 01, 2020 and immediately upon effectiveness of the the same HEL and HSPPL (Amalgamating Companies) were merged into the Company pursuant to the Scheme with effect from the appointed date, April 01,2020. The Scheme was sanctioned by the Ahmedabad bench of the Hon’ble National Company Law Tribunal [NCLT] vide its order dated December 23, 2021 and all the businesses, undertakings, activities, properties, investments and liabilities of each of the Amalgamating Companies were transferred to and vested in the Company as per the Scheme with effect from April 01,2020, being the appointed date. The certified copy of order and necessary forms was filed with Registrar of Companies, Gujarat [ROC] at Ahmedabad on December 24, 2021, being the effective date. The Scheme has accordingly been given effect to in these financial statements as per the accounting treatment approved in NCLT order and provided in the Scheme.

As Amalgamating Companies are under the common control of the shareholders, the Scheme has been accounted for in the books of the Company using Pooling of Interest method as prescribed in Appendix C to Ind AS-103 ["Business combinations of entities under common control"]. Accordingly,

(!) The assets and liabilities pertaining to the Amalgamating Companies vested in the Company have been accounted as provided in the Scheme, at their respective carrying values as appearing in their respective books on the opening hours of business on April 01,2020 being the Appointed Date.

(2) The inter-corporate deposits/ loans and advances outstanding between the Amalgamating Companies and the Company inter-se have been cancelled.

(3) No adjustments are made to reflect fair values, or recognise any new assets or liabilities. Adjustments are only made to harmonise accounting policies.

(4) The balance of the retained earnings appearing in the financial statements of the Company is aggregated with the corresponding balance appearing in the financial statements of the Amalgamating Companies or is adjusted against General Reserve.

(5) The identity of the reserves are preserved and the reserves of the Amalgamating Companies become the reserves of the Company.

(6) The surplus/deficit of the share capital of the Amalgamating Companies over the value of investments in the shares of these companies appearing in the books of the Company and cancelled pursuant to the Scheme has been adjusted in the "Capital Reserve Account" of the Company. Further, as a result of merger the net difference amounting to '' 604 lakhs was debited to the Capital Reserve.

The total consideration for amalgamation is '' 7,225 lakhs, which is determined by exchange ratio of 3 shares of the Company

against 1 share of HEL.

Scheme of Amalgamation - 2

The Company had filed a Scheme of Amalgamation between Harsha Engineers BV and Harsha Engineers International Limited (formerly known as Harsha Engineers International Private Limited and Harsha Abakus Solar Private Limited, "HASPL", the Company) and their respective shareholders and creditors under section 234 read with sections 230 to 232 along with other applicable provisions of the Companies Act, 2013 other applicable rules and regulations made thereunder (including any statutory modification(s) or re-enactment(s) or amendment(s) thereof for the time being in force), subject to necessary statutory approvals ("the Scheme of Amalgamation - 2").

The Company is holding 100% of the equity shares of the Harsha Engineers BV. Accordingly, pursuant to amalgamation of Harsha Engineers BV with the Company on the Appointed Date, equity shares held by the Company in Harsha Engineers BV has been cancelled and extinguished and hence, no shares of the Company were issued and allotted. On the Scheme of

Amalgamation - 2 being effective, the assets and liabilities pertaining to the Harsha Engineers BV has been accounted for at their respective carrying values as appearing in their respective books as on the Appointed Date i.e. November 14, 2022.

Harsha Engineers BV -Netherland has been merged with the Company effective from November 14, 2022 as per the Scheme of Amalgamation-2. The necessary accounting treatment has been given, as approved in NCLT order and provided in the Scheme of Amalgamation-2.

The surplus/deficit of the Net Equity of Harsha Engineers BV over the value of investments in the shares of this company appearing in the books of the Company and cancelled pursuant to the Scheme has been adjusted in the "Capital Reserve Account" of the Company. Further, as a result of merger the net difference amounting to '' 488 lakhs was credited to the Capital Reserve.

The Company has acquired 2 equity shares of Harsha Engineers Europe SRL by purchasing share from Mr. Rajendra Shah and Mr. Harish Rangwala who were holding 1 equity share of RON 10 each respectively. On account of acquisition, M/s Harsha Engineers Europe SRL has become wholly owned subsidiary of the Company.

32.7. Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker [CODM] of the company.

Ind AS 108 "Operating Segment" establishes standards for the way that public business enterprises report information about operating segments and related disclosures about products and services, geographic areas. Accordingly, information has been presented both along business segments and geographic segments.

A: BUSINESS SEGMENTS INFORMATION

The Chief Operating Decision Maker [CODM] reviews the Group as (i) "Engineering & Others" and (ii) "Solar-EPC and O&M" segment.

The CODM reviews revenue, results, total assets and total liabilities as the performance indicator of an operating segment.

The "Engineering & Others" segment includes all activities related with Bearing Cages & Stamp components including but not limited to sales, services, design, tooling, development, procurement and manufacturing.

The "Solar-EPC and O&M" segment includes all activities related with Solar Power Projects including but not limited to engineering, design, development, procurement, construction, erection, installation, commissioning, operation & maintenance.

The above business segments have been identified considering, (1) the different risk and returns and (2) the Customers.

The accounting policies adopted for segment reporting are in line with the accounting policy of the Company with following additional information for segment reporting.

32.8. Dividends Proposed to be Distributed

The Board of Directors, at its meeting held on May 25, 2023, recommended the final dividend of '' 1.00 per equity share of '' 10/- each, which will result in a total outflow of '' 910.44 lakhs. The recommended dividend is subject to the approval of the shareholders at the Annual General Meeting and hence not recognised as a liability as at March 31,2023.

32.9. Maintenance of Books of Accounts under Section 128 of the Companies Act, 2013

The Company has defined process to take daily back-up of books of account maintained electronically for audit trail and complied with the provisions of the Companies (Accounts) Rules, 2014 (as amended).

32.10. Events occurring after the Reporting Date

Adjusting events (that provides evidence of condition that existed at the balance sheet date) occurring after the balance sheet date are recognised in the financial statements. Material non adjusting events (that are inductive of conditions that arose subsequent to the balance sheet date) occurring after the balance sheet date that represents material change and commitments affecting the financial position are disclosed in the Director''s Report.

32.11 Previous year''s figures have been regrouped / reclassified to make them comparable with those of the current reporting year, wherever necessary.

32.12. Additional Regulatory Information

1) The Company does not have any investment property hence, comment related to revaluation is not made.

2) The Company has not granted any Loans or Advances in the nature of loans to promoters, directors, KMPs and the related parties (as defined under the Companies Act, 2013), either severally or jointly with any other person, that are: (a) repayable on demand; or (b)without specifying any terms or period of repayment.

3) No proceedings have been initiated during the year or are pending against the Company as at March 31,2023 for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (as amended in 2016) and rules made thereunder.

4) As on the reporting date, the Company has borrowings from banks or financial institutions on the basis of security of current assets and for which quarterly statements are submitted , which is in line with the books of accounts of the Company.

5) The Company has not been declared as willful defaulter (by virtue of Section 477 & 488 of the Companies Act, 2013) by any bank or financial institution or government or any government authority.

7) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

8) The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017

9) (A) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign

entities (Intermediaries) with the understanding that the Intermediary shall:

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

(B) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall :

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

10) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

11) The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

Fair value of financial assets and liabilities measured at amortised cost is not materially different from the amortised cost. Further, impact of time value of money is not significant for the financial instruments classified as current. Accordingly, the fair value has not been disclosed separately.

Investments in subsidiaries and equity accounted investees are carried at amortised cost.

Types of inputs are as under:

Input Level I (Directly Observable) which includes quoted prices in active markets for identical assets such as quoted price for an equity security on Security Exchanges.

Input Level II (Indirectly Observable) which includes prices in active markets for similar assets such as quoted price for similar assets in active markets, valuation multiple derived from prices in observed transactions involving similar businesses etc.

Input Level III (Unobservable) which includes management''s own assumptions for arriving at a fair value such as projected cash flows used to value a business etc.

B. Measurement of Fair ValuesValuation techniques and significant unobservable inputs

The following tables show the valuation techniques used in measuring Level 2 and Level 3 fair values, as well as the significant unobservable inputs used.

The Company’s principal financial liabilities comprises of loans & borrowings and trade & other payables. The main purpose of these financial liabilities is to finance the Company operations and to provide guarantees to support its operations. The Company’s principal financial assets include trade & other receivables, cash & cash equivalents and investments that are derived directly from its operations. The Company has exposure to the following risks arising from financial instruments:

i. Credit risk

ii. Liquidity risk

iii. Market risk

(i) Credit risk

Credit risk is the risk that a customer or counterparty to a financial instrument will fail to perform or fail to pay amounts due causing financial loss to the Company. The potential activities where credit risks may arise include from cash and cash equivalents, derivative financial instruments and security deposits or other deposits and principally from credit exposures to customers relating to outstanding receivables. The maximum credit exposure associated with financial assets is equal to the carrying amount. Details of the credit risk specific to the Company along with relevant mitigation procedures adopted have been enumerated below:

Trade receivables

The Company’s exposure to credit Risk is the exposure that Company has on account of goods & services rendered to a contractual counterparty or counterparties, whether with collateral or otherwise for which the contracted consideration is yet to be received. The Company’s customer base are Industrial and Commercial.

The Company provides for allowance for impairment that represents its estimate of expected losses in respect of trade and other receivables.

The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix.

The above receivables which are past due but not impaired are assessed on case-to-case basis. The instances pertain to third party customers which have a proven creditworthiness record. Management is of the view that these financial assets are not impaired as there has not been any adverse change in credit quality and are envisaged as recoverable based on the historical payment behavior and extensive analysis of customer credit risk, including underlying customers’ credit ratings, if they are available. Consequently, no additional provision has been created on account of expected credit loss on the receivables.

Other financial assets

Other financial assets comprise of cash and cash equivalents, Bank fixed deposits, loans provided to employees and investments in equity shares of companies other than subsidiaries, associates and joint ventures as well as derivative instruments.

- Cash and cash equivalents and Bank deposits are placed with banks having good reputation and past track record with adequate credit rating. The Company reviews their credit-worthiness at regular intervals.

- Investments are made in credit worthy Asset Management Companies or Instruments.

- Derivative instrument comprises cross currency interest rate swaps, forward contracts, options etc. where the counter parties are banks with good reputation, and past track record with adequate credit rating. Accordingly no default risk is perceived.

(ii) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are proposed to be settled by delivering cash or other financial asset. The Company’s financial planning has ensured, as far as possible, that there is sufficient liquidity to meet the liabilities whenever due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

(iii) Market risk

Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Company’s income or the value of its holdings of financial instruments.

Currency risk

The functional currency of the Company is Indian Rupees and its revenue is generated from operations in India. It is exposed to foreign currency risk arising out of the EURO, US Dollar, CNY & JPY. Accordingly, the foreign currency exposure and interest rate exposure has been hedged time to time as per the Company’s Risk management policy after evaluating the risk associated with.

This aside, the Company does not have any derivative instruments used for trading or speculative purposes. Interest rate risk

Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing investments will fluctuate because of fluctuations in the interest rates.

The Company’s portfolio of borrowings comprise of a mix of fixed rate and floating rate loans which are monitored continuously in the light of market conditions.

The Company’s objectives when managing capital are to:

- safeguard their ability to continue as a going concern so that they can continue to provide return for shareholders and benefits for other stakeholders.

- maintain an optimal capital structure to reduce the cost of capital.

Company believes in conservative leverage policy. Company’s capital expenditure plan over the medium term shall be largely funded through internal accruals.

The accompanying notes (1 to 34) are integral part of the financial statements.

---

Mar 31, 2022

Pursuant to the Scheme sanctioned by Hon’ble National Company Law Tribunal (NCLT), Ahmedabad bench vide its order December 23, 2021 and became effective from December 24, 2021, the authorized share capital of the ATPL, HEIPL, HEL & HSPPL ( Transferor Companies), amounting to Rs. 2,000,000 (Rupees Twenty Lakhs Only) consisting of 20,000 (Twenty Thousand) equity shares of Rs. 100/- (Rupees Hundred) each and Rs. 10,000,000 (Rupees One Crores Only) consisting of 1,000,000 (Ten Lakhs) equity shares of Rs. 10/- (Rupees Ten) each and Rs. 350,000,000 (Rupees Thirty-Five Crores only) consisting of 35,000,000 (Three Crores and Fifty Lakhs) equity shares of Rs. 10/- (Rupees Ten) each and Rs. 200,000 (Rupees Two Lakhs only) consisting of 20,000 (Twenty Thousand) equity shares of Rs. 10/- (Rupees Ten) each respectively has been consolidated with the authorized share capital of the HASPL (Transferee Company) hence as a result the Authorized Share Capital of the Company has been increased from Rs. 500,000,000/-(Rupees Fifty Crores ) to Rs. 862,200,000/- (Rupees Eighty Six Crores Twenty Two Lakhs). [ Refer Note 32.6 ]

Pursuant to the Scheme, on the Effective Date, the Paid-up Share Capital of the Company has been reduced from Rs. 5000 lakhs divided into 50,000,000 (Five crores) equity shares of Rs. 10/- (Rupees Ten only) each fully paid up to Rs. 500 lakhs divided into 50,000,000 (Five crores) equity shares of Re. 1/- (Rupee one only) each fully paid up. Simultaneously, pursuant to reduction as mentioned above, every 10 (Ten) such equity shares of the reduced face value of Re. 1/- (Rupee one only) each of the Company has been consolidated into 1 (One) Equity Share of the face value of Rs. 10/- (Rupees ten only) each fully paid and the fractions has been rounded up to the nearest whole number by issuing additional 10 Equity Shares of Rs. 10/- each at par. Also pursuant to the Scheme, the Company has issued 72,248,400 (Seven Crores Twenty Two Lakhs Forty Eight Thousand Four Hundred) Equity Shares of Rs. 10/- (Rupees ten only) to the shareholders of Harsha Engineers Limited (Transferor Company 3 / HEL) on record date, i.e. December 25, 2021. Accordingly the share capital has been increased to Rs. 7,724.80 lakhs divided into 77,248,410 (Seven Crores Seventy Two Lakhs Forty Eight Thousand Four Hundred and Ten) equity shares of Re. 10/- (Rupee ten only) each fully paid up. (Refer note 32.6).

Share Capital Pending Reduction & Allotment represents share capital pending reduction in Face Value from Rs. 10 to Re. 1 of the Company''s Equity Capital and also additional shares to be issued as amalgamation consideration on merger to shareholders of Harsha Engineers Limited. Since, the appointed date as per the Scheme is April 1, 2020 and as per Ind AS 103 (Appendix C), Business combinations of entities under common control, the scheme is required to be accounted from the beginning of the preceding period in the financial statements i.e. April 1, 2020, accordingly share capital reduction and additional shares to be issued on merger to shareholders of Harsha Engineers Limited have been accounted as Share Capital Pending Reduction & Allotment on April 1, 2019. Share capital Reduction in Face Value from Rs. 10 to Re. 1 has been effected on December 24, 2021 being effective date followed by consolidation of 10 shares of Rupee 1 each to 1 share of Rupees 10 each. Also the Company has issued 7,22,48,400 shares as consideration on record date i.e. December 25, 2021. Accordingly, on December 25, 2021, the balance lying in Share Capital Pending Reduction & Allotment account has been transferred to equity share capital (Refer note 32.6).

(1) RBL Bank Limited - Engineering Segment

a) . Security:

Exclusive charge by way of hypothecation over the entire Plant & Machinery created out of the term loan facility given by RBL Bank Limited. Collaterally secured by way of hypothecation over entire plant & machinery (present and future) of the company''s Changodar & Moraiya Plant (excluding Brass Division at Moraiya plant, DGBB Division at Changodar plant and the assets hypothecated to any other lenders) pari passu with State Bank of India.

b) . Brief terms and conditions of the term loans including re-schedulement, prepayment, penalty, default, etc.

1) Re-schedulement : at the lender’s discretion

2) Prepayment : Prepayment penalty of 3% up to March 31, 2019 and thereafter prepayment allowed out of internal accruals

3) Default : No payment of principal or interest on due date, breach of financial covenants.

(2) RBL Bank Limited (WCTL UNDER ECLG 2.0) - SOLAR Segment

a) . Security:

1) ECLGS Facility is secured by way of 1) second charge on all current assets of borrower both present and future 100% Cover by NCGTC under ECLGS Scheme, 2) Second charge on current assets of the borrower present and future.

b) . Brief terms and conditions of the term loans including re-schedulement, prepayment, penalty, default, etc.

Prepayment : No prepayment penalty shall be charged

(3) HDFC Bank Limited - Engineering Segment

a) . Security:

Exclusive charge by way of hypothecation on the entire plant & Machinery created out of the term loan facility given by HDFC Bank Limited

b) . Brief terms and conditions of the term loans including re-schedulement, prepayment, penalty, default, etc.

1) Re-schedulement : at the lender’s discretion

2) Prepayment : applicable @2% of amount prepaid in case prepaid initial within 2 years of loan tenure and NIL thereafter (if paid from own sources, internal accruals, equity)

3) Default : Any of the default event happen as per the agreement executed.

4) Any additional term loan borrowing by the company from any other lender should have a tenure no lesser than that of the TL being granted by HDFC Bank.

(4) HDFC Bank Limited (WCTL UNDER ECLG 2.0) - Engineering Segment

a) . Security:

Extension of second ranking charge over existing primary and collateral securities created in favor of the Bank i.e.

1) Extension of second ranking charge over the current assets of the company including all stocks and book debts (both present and future) and

2) Extension of second ranking charge over the Plant & Machinery created out of the Term Loan Facility given by HDFC Bank

b) . Brief terms and conditions of the term loans including re-schedulement, prepayment, penalty, default, etc.

1) Re-schedulement : at the lender’s discretion

2) Prepayment : No prepayment penalty shall be charged

3) Default : Any of the default event happen as per the agreement executed.

4) Guarantors not to issue any Personal Guarantee for any other loans without prior written permission of HDFC Bank except for Car Loans, Personal loans, Home loans, Education loans to be obtained for self and family members.

(1) State Bank of India :

Engineering Segment for Harsha India - Secured by hypothecation of entire current assets of the Engineering Division first ranking pari passu with Citibank N.A., Yes Bank Ltd., RBL Bank Ltd. and HDFC Bank Ltd. Collaterally secured by way of hypothecation over the entire plant & machinery of the Engineering Division''s Changodar and Moraiya Plant (excluding Brass Division at Moraiya Plant hypothecated to Citibank NA.; DGBB Division at Changodar Plant hypothecated to ICICI Bank Limited; Exclusive Assets hypothecated to HDFC Bank Limited and RBL Bank Limited on pari passu basis).

(2) Citi Bank :

Engineering Segment for Harsha India - Secured by hypothecation of entire current assets of the Engineering Division first ranking pari passu with State Bank of India, Yes Bank Limited, RBL Bank Limited and HDFC Bank Limited.

(3) YES Bank Ltd. :

Engineering Segment for Harsha India - Secured by hypothecation of entire current assets of the Engineering Division first ranking pari passu with State Bank of India, Citibank NA., RBL Bank Limited and HDFC Bank Limited and for Solar Segment Demand loans from banks are secured by personal guarantee of Mr. Rajendra Shah and Mr. Harish Rangwala and also by first pari passu charge with RBL Bank Ltd. by hypothecation of the Solar Division’s assets including stock of Raw Materials, Semi-Finished, Finished Goods, Consumable Stores and spares and other such movables, book debts, bill whether documentary or clean, outstanding monies, receivables, plant and machineries and all other current assets both present and future excluding project specific charge.

(4) RBL Bank Ltd. :

Engineering Segment for Harsha India - Secured by hypothecation of entire current assets of the Engineering Division first ranking pari passu with State Bank of India, Citibank NA., Yes Bank Limited and HDFC Bank Limited and for Solar Segment Demand loans from banks are secured by personal guarantee of Mr. Rajendra Shah and Mr. Harish Rangwala and also by first pari passu charge with YES Bank Ltd by hypothecation of the Solar Division’s assets including stock of Raw Materials, Semi-Finished, Finished Goods, Consumable Stores and spares and other such movables, book debts, bill whether documentary or clean, outstanding monies, receivables, plant and machineries and all other current assets both present and future.

(5) HDFC Bank Ltd. :

Engineering Segment for Harsha India - Secured by hypothecation of entire current assets of the Engineering Division first ranking pari passu with State Bank of India, Citibank NA., Yes Bank Limited and RBL Bank Limited.

(6) ICICI Bank Ltd. :

Engineering Segment for Harsha India - Secured by first charges on all movables assets of DGBB Division, Changodar.

1. Pursuant to the Scheme sanctioned by Hon’ble National Company Law Tribunal (NCLT), Ahmedabad bench vide its order dated December 23, 2021, Aastha Tools Private Limited (ATPL), Harsha Engineers (India) Private Limited (HEIPL) has been merged with Harsha Engineers Limited (HEL) w.e.f appointed date i.e April 1, 2020 and effective from December 24, 2021 and immediately upon effectiveness of the same. HEL and Helianthus Solar Power Private Limited (HSPPL) has been merged with Harsha Engineers International Limited (formerly known as Harsha Engineers International Private Limited and Harsha Abakus Solar Private Limited, ""HASPL"") with effect from appointed date i.e April 1, 2020.

2. Pursuant to the Scheme, Harsha Precision Bearing Components (China) Co. Ltd., Harsha Engineers BV and Harsha Engineers Europe SRL becomes the subsidiaries of the Company with effect from April 1, 2020 i.e Appointed date.

3. The Board at its meeting held on February 20, 2021 approved the Scheme of Amalgamation - 2 of Harsha Engineers BV with the Company and their respective shareholders and creditors in accordance with the provision of Companies Act which is currently under process.

4. Related Party Transactions (RPT) by the Company are also included RPT of Transferor Companies as per the Scheme for the reporting periods. It may be noted that as per the Scheme approved by the NCLT, Ahmedabad Bench dated December 23, 2021, RPT made by Transferor Companies during the respective reporting period are also considered as RPT with respect to the merged entity i.e Harsha Engineers International Limited (formerly known as Harsha Engineers International Private Limited and Harsha Abakus Solar Private Limited, ""HASPL"").

5. HACM Solar LLP, Joint Venture of the Company has been dissolved on October 21, 2021 and name has been struck off from the ROC.

1. Mr. Rajendra Shah is appointed as Chairman and Whole Time Director of the Company with effect from December 25, 2021.

2. Mr Harish Rangwala is appointed as Managing Director of the Company with effect from December 25, 2021.

3. Mr. Vishal Rangwala is appointed as Director of the company with effect from August 12, 2021 and appointed as CEO and Whole time Director of the Company with effect from December 25, 2021.

4. Mr. Pilak Shah is appointed as COO and Whole-time Director of the Company with effect from December 25, 2021.

5. Ms. Hetal Ukani is appointed as Director of the company with effect from August 12, 2021 and appointed as Whole time Director with effect from December 25, 2021.

6. Mr. Ambar Patel, Mr. Kunal Shah, Prof. (Dr.) Neharika Vohra, Dr. Bhushan Punani and Mr. Ramakrishnan Kasinathan are appointed as Independent Directors of the company with effect from January 10, 2022.

7. Mr. Maulik Jasani is appointed as VP Finance & Group CFO of the Company with effect from December 25, 2021.

8. Mr. Kiran Mohanty is appointed as Company Secretary & Chief Compliance officer of the company with effect from August 12, 2021.

Note :

1. Mr. Dilip Sanghvi is resigned from the position of Independent Director of the company with effect from December 25, 2021.

2. Designation of Mr. Falgun Shah has been changed from Chief Financial Officer to Head of Finance & Accounts - Solar EPC Division with effect from December 25, 2021.

3. Mr. Jitendra Mamtora is resigned from the position of Independent Director of the Company with effect from April 23, 2021.

# It includes Rs. 1500 lakhs of the City Civil Court, Bengaluru case filed by Orchestrate Systems Private Limited (OSPL) against the Company. This matter was filed by OSPL after the winding up petition was filed by the Company against OSPL at Karnataka High Court. Later the Company had withdrawn the winding up petition at Karnataka High court against OSPL, with permission of court to pursue the matter under MSMED Act. Thereafter, the Company had filed MSME case against OSPL for recovery of Rs. 686 lakhs and on conciliation fail at MSMEFC the matter was refer to Arbitration. After completion of arbitration, arbitrator has passed necessary order in favour of the Company for recovery of Rs. 686 lakhs plus interest as per the said order dated May 4, 2019. The company has filed execution petition at commercial court Raipur for above arbitration order as assets of OSPL are located in Chhattisgarh. The same matter is pending with commercial court, Raipur. OSPL has challenged this arbitration at Gujarat High court and the same matter is also pending with Gujarat High court. Against, civil court case at Bengaluru by OSPL, Counter Claim Revival Application has been submitted by the Company, Hearing on revival application is in process.

Note : 1. All of the issue of litigation pertaining to Income tax are based on interpretation of the income tax law & rules, Management has been opined by its counsel that many of the issues raised by revenues will not be sustainable in law as they are covered by judgements of respective judicial authorities which supports its contention. As such no material impact on the financial of the Company is envisaged.

Note : 2. Most of the issue of litigation pertaining to Central Excise / Service tax are based on interpretation of the tax law & rules, Management has been opined by its counsel that many of the issues raised by revenues will not be sustainable in law as they are covered by judgements of respective judicial authorities which supports its contention. As such no material impact on the financial of the Company is envisaged.

32.6. MERGER

Pursuant to the Composite Scheme of Amalgamation and Arrangement between Aastha Tools Private Limited (ATPL), Harsha Engineers (India) Private Limited (HEIPL), Harsha Engineers Limited (HEL), Helianthus Solar Power Private Limited (HSPPL) and Harsha Abakus Solar Private Limited (the Company) and their respective shareholders and creditors under section 230 to 232 read with section 61 and 66 along with other applicable provisions of the Companies Act, 2013 ("the Scheme” or "Business Reorganisation Scheme”), ATPL and HEIPL were merged into HEL with effect from the appointed date, April 01, 2020 and immediately upon effectiveness of the same HEL and HSPPL (Amalgamating Companies) were merged into the Company pursuant to the Scheme with effect from the appointed date, April 01, 2020. The Scheme was sanctioned by the Ahmedabad bench of the Hon’ble National Company Law Tribunal [NCLT] vide its order dated December 23, 2021 and all the businesses, undertakings, activities, properties, investments and liabilities of each of the Amalgamating Companies were transferred to and vested in the Company as per the Scheme with effect from April 01, 2020, being the appointed date. The certified copy of order and necessary forms was filed with Registrar of Companies, Gujarat [ROC] at Ahmedabad on December 24, 2021, being the effective date. The Scheme has accordingly been given effect to in these financial statements as per the accounting treatment approved in NCLT order and provided in the Scheme.

As Amalgamating Companies are under the common control of the shareholders, the Scheme has been accounted for in the books of the Company using Pooling of Interest method as prescribed in Appendix C to Ind AS-103 [“Business combinations of entities under common control”]. Accordingly,

(1) The assets and liabilities pertaining to the Amalgamating Companies vested in the Company have been accounted as provided in the Scheme, at their respective carrying values as appearing in their respective books on the opening hours of business on April 01, 2020 being the Appointed Date.

(2) The inter-corporate deposits / loans and advances outstanding between the Amalgamating Companies and the Company inter-se have been cancelled.

(3) No adjustments are made to reflect fair values, or recognise any new assets or liabilities. Adjustments are only made to harmonize accounting policies.

(4) The balance of the retained earnings appearing in the financial statements of the Company is aggregated with the corresponding balance appearing in the financial statements of the Amalgamating Companies or is adjusted against General Reserve.

(5) The identity of the reserves are preserved and the reserves of the Amalgamating Companies become the reserves of the Company.

(6) The surplus / deficit of the share capital of the Amalgamating Companies over the value of investments in the shares of these companies appearing in the books of the Company and cancelled pursuant to the Scheme has been adjusted in the “Capital Reserve Account” of the Company. Further, as a result of merger the net difference amounting to Rs. 604 lakhs was debited to the Capital Reserve.

Scheme of Amalgamation - 2

The Company has also filed a Scheme of Amalgamation between Harsha Engineers B.V. and Harsha Engineers International Limited (formerly known as Harsha Engineers International Private Limited and Harsha Abakus Solar Private Limited, "HASPL", the Company) and their respective shareholders and creditors under section 234 read with sections 230 to 232 along with other applicable provisions of the Companies Act, 2013 other applicable rules and regulations made thereunder (including any statutory modification(s) or re-enactment(s) or amendment(s) thereof for the time being in force), subject to necessary statutory approvals ("the Scheme of Amalgamation - 2") .

The Company is holding 100% of the equity shares of the Harsha Engineers BV. Accordingly, pursuant to amalgamation of Harsha Engineers B.V. with the Company on the Appointed Date, equity shares held by the Company in Harsha Engineers BV shall be cancelled and extinguished and hence, no shares of the Company shall be issued and allotted. On the Scheme of Amalgamation - 2 being effective, the assets and liabilities pertaining to the Harsha Engineers B.V. will be accounted for at their respective carrying values as appearing in their respective books as on the Appointed Date.

Currently the Scheme of Amalgamation-2 is under process at NCLT for their approval.

32.7. SEGMENT REPORTING

Segment Information has been given in the Consolidated Financial Statements of the Company. Hence, as per Ind AS-108 “Operating Segments” issued by the Institute of Chartered Accountants of India, no separate disclosure on segment information is given in these financial statements.

32.8. EVENTS OCCURRING AFTER THE REPORTING DATE

Adjusting events (that provides evidence of condition that existed at the balance sheet date) occurring after the balance sheet date are recognized in the financial statements. Material non adjusting events (that are inductive of conditions that arose subsequent to the balance sheet date) occurring after the balance sheet date that represents material change and commitments affecting the financial position are disclosed in the Director’s Report.

Pursuant to the merger, the Company had made an application for adjudication of stamp duty order as required under Gujarat Stamp Act. Subsequently the Company has received demand notice from the office of the Superintendent of Stamps, Gujarat State, Gandhinagar vide its letter dated April 13, 2022 for the payment of stamp duty of Rs. 91,91,100 and same was paid by the Company. The Company has received the stamp adjudication order on April 28, 2022 stating the payment has been made as per section 32 of Gujarat Stamp Act.

32.9 Previous year’s figures have been regrouped / reclassified to make them comparable with those of the current reporting year, wherever necessary.

32.10 The outbreak of Coronavirus (COVID-19) pandemic globally and in India is causing disturbance and slowdown of economic activity. In many countries, businesses are being forced to cease or limit their operations for long periods of time. Measures taken to contain the spread of the virus, including travel bans, quarantines, social distancing, and closures of non-essential services have triggered significant disruptions to businesses worldwide, resulting in an economic slowdown.

COVID19 is significantly impacting business operation of the Company in initial periods by way of interruption in production, supply chain disruption, unavailability of personnel, closure / lockdown of production facilities etc. On March 24, 2020, the Government of India ordered a nationwide lockdown for 21 days which further got extended to prevent community spread of COVID-19 in India resulting in significant reduction in economic activities. The company has started production and other operations as per the Government / local body guidelines and approval.

Due to outbreak of COVID-19 globally and in India, the company’s management has made initial assessment of likely adverse impact on business and increase in financial risks. The company has specifically reviewed its assets to ensure and believes that the impact is likely to be short term in nature and is negligible. The management does not see any medium to long term risks in the Company’s ability to continue as a going concern and meeting its liabilities as and when they fall due.

32.11. ADDITIONAL REGULATORY INFORMATION

1) The company does not have any investment property hence, comment related to revaluation is not made.

2) The Company has not granted any Loans or Advances in the nature of loans to promoters, directors, KMPs and the related parties (as defined under Companies Act, 2013), either severally or jointly with any other person, that are: (a) repayable on demand; or (b)without specifying any terms or period of repayment.

3) No proceedings have been initiated during the year or are pending against the Company as at March 31, 2022 for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (as amended in 2016) and rules made thereunder.

4) As on the reporting date, the company has borrowings from banks or financial institutions on the basis of security of current assets and for which quarterly statements are submitted , which is in line with the books of accounts of the company.

5) The Company has not been declared as willful defaulter (By virtue of Section 477 & 488 of The Companies Act, 2013) by any bank or financial institution or government or any government authority.

7) The company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

8) The company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.

9) (A) The company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

(B) The company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the company shall :

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

10) The company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

11) The company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

Fair value of financial assets and liabilities measured at amortised cost is not materially different from the amortised cost. Further, impact of time value of money is not significant for the financial instruments classified as current. Accordingly, the fair value has not been disclosed separately.

Investments in subsidiaries and Investments in Joint venture / Associates are carried at amortised cost.

Types of inputs are as under:

Input Level I (Directly Observable) which includes quoted prices in active markets for identical assets such as quoted price for an equity security on Security Exchanges

Input Level II (Indirectly Observable) which includes prices in active markets for similar assets such as quoted price for similar assets in active markets, valuation multiple derived from prices in observed transactions involving similar businesses etc.

Input Level III (Unobservable) which includes management''s own assumptions for arriving at a fair value such as projected cash flows used to value a business etc.

B. MEASUREMENT OF FAIR VALUES

Valuation techniques and significant unobservable inputs

The following tables show the valuation techniques used in measuring Level 2 and Level 3 fair values, as well as the significant unobservable inputs used.

C. FINANCIAL RISK MANAGEMENT

The Company’s principal financial liabilities comprises of loans & borrowings and trade & other payables. The main purpose of these financial liabilities is to finance the Company operations and to provide guarantees to support its operations. The Company''s principal financial assets include trade & other receivables, cash & cash equivalents and investments that are derived directly from its operations. The Company has exposure to the following risks arising from financial instruments:

i. Credit risk

ii. Liquidity risk

iii. Market risk

Credit risk is the risk that a customer or counterparty to a financial instrument will fail to perform or fail to pay amounts due causing financial loss to the company. The potential activities where credit risks may arise include from cash and cash equivalents, derivative financial instruments and security deposits or other deposits and principally from credit exposures to customers relating to outstanding receivables. The maximum credit exposure associated with financial assets is equal to the carrying amount. Details of the credit risk specific to the company along with relevant mitigation procedures adopted have been enumerated below:

Trade receivables

The Company’s exposure to credit Risk is the exposure that Company has on account of goods & services rendered to a contractual counterparty or counterparties, whether with collateral or otherwise for which the contracted consideration is yet to be received. The Company’s customer base are Industrial and Commercial.

The Company provides for allowance for impairment that represents its estimate of expected losses in respect of trade and other receivables.

The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix.

The above receivables which are past due but not impaired are assessed on case-to-case basis. The instances pertain to third party customers which have a proven creditworthiness record. Management is of the view that these financial assets are not impaired as there has not been any adverse change in credit quality and are envisaged as recoverable based on the historical payment behavior and extensive analysis of customer credit risk, including underlying customers’ credit ratings, if they are available. Consequently, no additional provision has been created on account of expected credit loss on the receivables. There are no other classes of financial assets that are past due but not impaired. The concentration of credit risk is limited due to fact that the customer base is large and unrelated.

Other financial assets

Other financial assets comprise of cash and cash equivalents, Bank fixed deposits, loans provided to employees and investments in equity shares of companies other than subsidiaries, associates and joint ventures as well as derivative instruments.

- Cash and cash equivalents and Bank deposits are placed with banks having good reputation and past track record with adequate credit rating. The Company reviews their credit-worthiness at regular intervals.

- Investments are made in credit worthy companies.

- Derivative instrument comprises cross currency interest rate swaps, forward contracts, options etc. where the counter parties are banks with good reputation, and past track record with adequate credit rating. Accordingly no default risk is perceived.

(ii) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are proposed to be settled by delivering cash or other financial asset. The Company’s financial planning has ensured, as far as possible, that there is sufficient liquidity to meet the liabilities whenever due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Company’s income or the value of its holdings of financial instruments.

Currency risk

The functional currency of the company is Indian Rupees and its revenue is generated from operations in India. It is exposed to foreign currency risk arising out of the EURO, US Dollar, CNY & JPY. Accordingly, the foreign currency exposure and interest rate exposure has been hedged time to time as per the company''s Risk management policy after evaluating the risk associated with.

This aside, the Company does not have any derivative instruments used for trading or speculative purposes.

Interest rate risk

Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing investments will fluctuate because of fluctuations in the interest rates.

The Company’s portfolio of borrowings comprise of a mix of fixed rate and floating rate loans which are monitored continuously in the light of market conditions.

Company believes in conservative leverage policy. Company’s capital expenditure plan over the medium term shall be largely funded through internal accruals.